Scanning Europe: A Diverse and Promising Short-haul Travel Consumer Market

Consumer Discretionary, Automotive Author: Steve Bu Aug 11, 2023 10:20 AM (GMT+8)

Recently, during a conference call with a domestic investor from China, when asked if he was interested in the European market, his response was, "Our current projects focus on the United States, and Europe is just something we casually look into."


This attitude is likely shared by the majority of investors. For companies, the European market is perceived to have high entry barriers, complex regional dynamics, and challenges in consumer brand education. Consequently, many brands considering international expansion adopt a wait-and-see approach towards Europe. If there is demand for their products, they might consider selling through cross-border e-commerce platforms such as AliExpress or Amazon, without having the courage to establish a long-term local presence or deeply engage with the consumer market.

Whether Europe is a market worth deepening brand presence through international expansion has been discussed in my previous articles and will not be elaborated on here. What is more important is that some Chinese companies operating in niche markets have already recognized the hidden opportunities beneath the surface several years ago and have taken action. Today, we will examine the short-haul travel market, which serves as a typical case study.

Why Short-haul Travel?

The strong demand for short-haul commuting in Europe is determined by the continent's unique geography and urban development paths.

From a geographical perspective, Europe is characterized by its mountainous terrain, steep landscapes, and significant elevation differences within cities. The development of suburban and rural areas has reached saturation while preserving the original topography. For example, the elevation difference between the outskirts and the city center of Dublin, the capital of Ireland, can reach approximately 40-50 meters. The Italian cities of Milan and Genoa, located in the northern Alps, also demonstrate this characteristic.

From the perspective of residents' living habits and urban features, European cities generally have hundreds or even thousands of years of history, with their basic architectural styles well-preserved. Modern urban development often revolves around these historic city centers. Consequently, narrow streets, limited parking spaces, and constrained living spaces have led to a significant number of residents settling in the suburbs. This allows for quick commuting to the city center while ensuring an adequate per capita living area with a smaller population. The stricter emission regulations imposed by the European Union have also placed restrictions on a minority of individuals who favor high-displacement vehicles. When all these factors are combined, the convenience of commuting using bicycles and A0-class micro-cars becomes apparent.


One might wonder why Chinese electric bikes and electric scooters aren't directly sold in Europe. In fact, it's not that simple. In an article titled "China's E-bike Rush into Europe: How Do Overseas Brands Challenge Local Industry Barriers?" published by EqualOcean, it is pointed out that according to relevant EU laws, electric bicycles or motorcycles with speeds exceeding 25 km/h require certification. Users must wear helmets and obtain the appropriate driving license, which unintentionally dampens the enthusiasm of some electric motorcycle buyers. E-bikes (electric-assisted bicycles), on the other hand, have fewer restrictions. Their speed usually remains below 25 km/h, and the motor only stops outputting power when this speed limit is exceeded, thus achieving significant time and effort savings. Coupled with Europe's strong cycling culture, many people prefer traditional bicycle-shaped means of transportation. This has contributed to the popularity of E-bikes. Additionally, the more affordable E-scooters are following closely behind E-bikes and have become one of the main commuting tools for young people in European cities.


Another direction that Chinese new energy vehicle brands currently venturing into Europe are considering is the production of small cars. Unlike domestic consumers who often believe that bigger is better, pursuing all-around practicality in their vehicles, a considerable proportion of European consumers are not particularly fond of larger vehicles. Apart from factors such as difficulties in finding parking spaces, the higher risk of accidents associated with larger vehicles, and the wastage of public resources, the frequency of family car usage in Europe is lower. Car scenarios usually involve single individuals, friends, or couples who do not require large vehicles with long wheelbases. Additionally, the purchase taxes and value-added taxes for small cars are lower. These factors collectively contribute to the popularity of small cars among Europeans. Based on EqualOcean's previous impressions in Ireland, models such as the Honda Fit, Toyota Yaris, Renault Megane, and Volkswagen T-ROC have consistently maintained their popularity in the used car market.

Chinese Brands Making Strides in the European Short-Haul Travel Market

E-bikes and E-scooters

At their core, both E-bikes and E-scooters fall under the category of smart hardware. Most Chinese companies that have established a presence in Europe have incorporated some degree of smart technology into their products. The reasons are simple: Chinese brands offer affordability, localized designs and features that resonate with local consumers, and a higher level of smart functionality compared to local brands. These factors make it easier for them to succeed in the relatively accessible e-commerce market.

E-scooters, known for their affordability, have become a popular choice for many local students for their daily commutes. According to a market research report, the European E-scooter market is projected to reach USD 60.6 billion by 2030, with a compound annual growth rate of 20.4% from 2023 to 2030. In terms of sales volume, the market is expected to reach 23.1 million units by 2030, with a compound annual growth rate of 19.0%. Germany is expected to hold the largest share of the European E-scooter market in 2023.

As an early player in the IoT ecosystem, Xiaomi's (小米) sub-brand, Mijia (米家), has established an unshakable position in the European online and offline retail markets. Mi Home's short-haul travel products primarily consist of E-scooters, which are mostly manufactured by Ninebot (九号公司), a company within Xiaomi's ecosystem. Mi Home has captured over 50% of the European market share, driven by both consumer purchases and bulk orders from European E-scooter sharing service providers like Lime. In April of this year, Xiaomi launched the E-scooter 4 Pro in the European market, featuring an extended range of 55 km. It is currently available in countries such as the Netherlands, France, Spain, and Germany.


Sharing E-scooter in European Streets

The E-bike and electric motorcycle categories have attracted a multitude of emerging Chinese brands looking to tap into the European market. DYU (大鱼智行), also known as DYU Smart Bike, made its official entry into the European market in 2017. Its products feature unique designs inspired by the leaping motion of dolphins and incorporate foldable functionality. DYU Smart Bike has successfully targeted the niche market of leisure and light sports, while addressing the strong need for flexible transportation options within Europe's public transit system. It was the first Chinese brand to enter European and American supermarkets, offering products priced at just a few hundred dollars, quickly gaining traction in the mid-to-low-end market.

TENWAYS, a subsidiary of Shenzhen Tenways Technology, has attracted attention in recent years as a mysterious brand. It is considered mysterious because it has no presence in the domestic Chinese market and has received minimal media exposure. Founded in 2021, TENWAYS quickly secured investments from Tencent (腾讯), Hillhouse Capital (红杉资本), and Alibaba (阿里巴巴), making it a rising star in the eyes of venture capitalists. According to its official website, TENWAYS offers three models: CGO600, CGO600 Pro, and CGO 800, with prices ranging from EUR 1499 to EUR 1899. With a range of 70 to 100 km, and considering the average lifespan of 3-5 years, these prices are easily acceptable in the European market.

NIU (小牛电动), the electric scooter manufacturer, chose Germany as its first overseas market and introduced a rarity in European streets—the electric motorcycle. According to NIU CEO Li Yan, the annual sales of motorcycles in Europe are only 1.5 million units, and NIU targeted the short commuting needs of this segment of European users. Despite the high price of the first model, N1S, reaching EUR 2,500 in Germany, NIU's outstanding localized design, such as portable lithium batteries, wide handlebars, large-sized tires, and high-speed cruising, helped it gradually penetrate the market and become synonymous with fashionable and environmentally friendly electric vehicles. Additionally, NIU also offers E-bikes and E-scooters within its product lineup.

Other Chinese E-bike players in the European market include Giant, Yadea, and Lemmo (a brand focusing on overseas markets), according to information obtained by EqualOcean.

Small & Compact New Energy Vehicles

The vast small car consumer market in Europe has attracted numerous large new energy vehicle brands and companies focused on overseas expansion. YOYO, a pure electric small car, is a brand under the Chinese new energy vehicle company XEV Technology (悠遥科技). Priced at 15,900 euros, it quickly gained popularity in the streets and alleys when it was launched in May 2021, achieving outstanding sales performance and ranking among the top three Chinese new energy vehicle brands in cumulative sales in Europe that year. Currently, YOYO has been successfully selling in the European market for nearly two years, attracting a large number of European enthusiasts. The company provides three energy replenishment methods in Europe: AC charging, battery swapping, and door-to-door battery swapping, as well as 3D printing personalized customization services.


XEV YOYO (Source: XEV Website)

SAIC Motor's MG (上汽名爵) brand is becoming a hot Chinese brand overseas. Its MG4 EVMG, with its innovative LSB lying flat battery cell and pure electric platform with a short front suspension high-efficiency layout, brings a lightweight appearance, spacious seating space, and a driving experience comparable to that of a fuel-powered midsize car. This model has successfully entered the top 20 best-selling brands in Europe, surpassing well-known European and American car brands such as Tesla and MINI, becoming the only Chinese electric vehicle to make the list in the European market.

NIO (蔚来) announced in May of this year that the company will launch two additional brands in the European market, one of which will offer small, affordable electric vehicles priced below EUR 30,000 (approximately RMB 229,000).

Decision-making and Judgment in the Industry Trends

In the field of transportation, Chinese brand manufacturers rely on a well-established and highly integrated supply chain, which has created a group of cost-effective brands. As a result, they have received positive responses when entering markets in Southern and Central Eastern European countries with relatively lower incomes. However, when faced with the challenge of highly brand-loyal consumers in Western and Northern Europe, this approach becomes less effective. Therefore, EqualOcean has summarized three major trends and overseas experiences:

Cross-border e-commerce platforms will become the main focus for Chinese brands to expand overseas, as only by achieving a top position in platform categories can they have the leverage to enter offline supermarkets. Therefore, manufacturers should not consider the offline market until they have achieved significant online sales.

Currently, there are not many Chinese brands in the short-haul travel sector, and the regions they target for expansion are relatively homogeneous, primarily Western and Southern Europe. Additionally, the products of local brands generally can not match those of domestic brands, resulting in a fragmented market with low concentration, which is relatively friendly for new entrants.

The ultimate destination in the transportation industry is services. Both two-wheelers and four-wheelers require the establishment of offline service networks to facilitate user repairs, parts replacement, modifications, etc. This is a signal of rooting in the local market. Currently, the only two-wheeler brand that has consistently provided excellent offline services is NIU Electric. Among four-wheel brands, NIO has covered Germany and the Netherlands with its battery swapping station network and plans to open it to other brand owners.